Uploaded March 2026 | Updated September 2026, 1 week ago
When you trade, you incur costs and these costs can be a drag on your investment returns. In this session, we look past the brokerage costs of trading to bring in the larger costs: the bid-ask spread, the price impact and the opportunity cost of waiting. These costs not only vary across companies and time, but they can vary across strategies. In the last part of the session, we look at how much of an investor’s returns are consumed by taxes and note that more trading generally leads to larger tax liabilities.
Playlist for class (Intro + 42 sessions): youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session6.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6soln.pdf
When you trade, you incur costs and these costs can be a drag on your investment returns. In this session, we look past the brokerage costs of trading to bring in the larger costs: the bid-ask spread, the price impact and the opportunity cost of waiting. These costs not only vary across companies and time, but they can vary across strategies. In the last part of the session, we look at how much of an investor’s returns are consumed by taxes and note that more trading generally leads to larger tax liabilities.
Playlist for class (Intro + 42 sessions): youtube.com/playlist?list=PLUkh9m2BorqnZGADa8cTzeJblmrZY_SqP&si=zI2pk17pJeld4nWR
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilslides25/session6.pdf
Post-class test: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6test.pdf
Post-class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/invphilcertificate/postclass/session6soln.pdf
